Download old mutual multi-managers inflation plus 5

OLD MUTUAL MULTI-MANAGERS
JUNE 2017
OLD MUTUAL MULTI-MANAGERS INFLATION PLUS 5 - 7% STRATEGY
* The Old Mutual Multi-Managers inflation plus strategies were created to provide investors with investment strategies that are identical to the SIS Life Inflation plus strategies
used by Acsis for more than 10 years. The funds are housed on the OMLACSA life license. Returns reported for 1 year period is what clients have experienced in the
Old Mutual Multi-Managers strategy on a gross basis. The returns for periods greater than 1 year are composite returns of the Old Mutual Multi-Managers and SIS
strategies. The Old Mutual Multi-Managers and the SIS Life range are managed in the same way by our investment team.
INCEPTION DATE*: 14 October 1999
THE MAIN INVESTMENTS
ASSETS UNDER MANAGEMENT*: R7.7bn
This investment strategy is made up of underlying portfolios, which invest
in specialist asset classes managed by various asset managers. Generally,
the strategy may invest in South African and international cash, fixed
interest securities, listed shares and listed property. This strategy aims to
achieve high capital growth over a long-term horizon. It therefore has a
high exposure to growth assets such as equities and minimum exposure to
income-generating asset classes.
PERFORMANCE TARGET: CPI +6%
INVESTMENT OBJECTIVE
This investment strategy seeks to grow your capital and income at a moderate
to high pace. It invests in a range of portfolios diversified across various
asset classes, asset managers and high-quality instruments, including South
African and international cash, fixed interest securities, listed property and
listed shares. It aims to achieve a return in the range of 5%-7% above
inflation over rolling seven-year periods.
This policy based investment is specifically designed for institutional investors
and is managed to comply with Regulation 28 of the Pension Funds Act
of South Africa.
PERFORMANCE DATA TO 30 JUNE 2017*
% Performance (p.a.)
Old Mutual MultiManagers Inflation
Plus 5 - 7 Strategy
CPI +6% p.a.**
5 yrs
10
yrs
7 yrs
15
yrs
Since
inception
1 yr
2 yrs
3 yrs
4.0%
6.3%
7.9% 15.4% 15.8% 11.8% 15.4%
14.7%
11.2% 11.7% 11.4% 11.7% 11.6% 12.2% 11.8%
12.1%
** CPI refers to the CPI (all urban areas) as provided by Statistics South Africa, effective
1 January 2009. Prior to January 2009, the CPIX (all metropolitan and urban areas) was
used as the measure for inflation for our funds. The benchmark returns shown here are a
composite of the two measures. The previous month’s change in inflation is used as an
estimate for the current month (since inflation numbers are released one month in arrears).
LIKELY FUND RANGE OF RETURNS AND CURRENT RETURN*
50%
ASSET MANAGER PROFILES
Old Mutual Multi-Managers researches the market and appoints the most
appropriate asset managers to manage the strategy’s underlying portfolios.
After appointing asset managers, the investment team continually monitors
the strategy, the underlying portfolios and the appointed managers
and their investment processes to ensure that they remain appropriate.
Old Mutual Multi-Managers has selected a combination of asset managers
to manage this strategy’s various underlying portfolios.
Asset Manager
Responsibility
South African equity, fixed income & inflation-linked
bonds
South African equity, long/short equity, fixed
income, international equity (emerging markets) &
Africa equity
South African inflation-linked bonds & cash
South African cash
International fixed income
40%
30%
South African fixed income
20%
South African & international property
10%
South African equity & long/short equity
0%
South African long/short equity
-10%
-20%
1
2
3
5
10
15
20
30
Year(s) to 30 June 2017
The graph shows the strategy’s likely fund range of returns over different
investment periods, based on the research team’s investigation and modelling.
The diamonds indicate the current actual historical return over each period.
PERFORMANCE AGAINST STRATEGY OBJECTIVE*
South African equity & long/short equity
South African equity & long/short equity
South African property
International property
(SINCE INCEPTION)
1 100%
1 000%
900%
International equity
Old Mutual Multi-Managers Inflation Plus 5 - 7% Strategy
CPI +6% p.a.
International equity
800%
700%
600%
International equity
500%
400%
300%
International equity
200%
100%
0%
-100%
Oct 99
Jul 01
Apr 03
Jan 05
Oct 06
Jul 08
Apr 10
Jan 12
Oct 13
The graph illustrates the strategy’s performance against its performance target.
Jul 15
Apr 17
OLD MUTUAL MULTI-MANAGERS
JUNE 2017
OLD MUTUAL MULTI-MANAGERS INFLATION PLUS 5 - 7% STRATEGY
ASSET CLASS HOLDINGS
60%
50.9%
50%
40%
30%
19.6%
20%
10.0%
10%
6.1%
6.0%
1.5%
0%
SA Equity
Long/Short
Equity
SA Fixed
Income
5.0%
0.9%
SA Bonds SA Property International International Africa Equity
Equity
Property
STRATEGY COMMENTARY JUNE 2017
The inflation plus 5-7 strategy returned 15.8% per annum over the recommended minimum investment period of seven years, outperforming its target of 11.6%.
Over the last 12 months, this strategy returned 4.0%.
In June the South African economy entered a technical recession. South Africa’s gross domestic product (GDP) unexpectedly decreased in real terms at an
annualised rate of 0.7% quarter-on-quarter in the first quarter of 2017. This is the second consecutive quarterly decrease in GDP, following the negative growth
number witnessed in the last quarter of 2016. While the weakness of the economy should not be understated, the numbers also mask the fact that the economy
did grow on a year-on-year basis. Compared to the first quarter of 2016, the economy grew by 1.0% year-on-year in real terms, the fastest annual growth rate
in seven quarters.
In addition to the weak economic growth numbers, June also saw South Africa’s credit rating downgraded by Moody’s. In a move that was widely expected,
Moody’s downgraded South Africa’s local and foreign currency credit ratings by one notch to Baa3, Moody’s lowest investment grade rating. The main silver
lining for the South African economy has been lower inflation. Inflation in May was 5.4% year-on-year, which was marginally higher than April’s number due to
a petrol price hike in May. Nonetheless, inflation remains within the Reserve Bank’s target range of 3.0% to 6.0%, which provides some scope for the Bank to
potentially lower interest rates.
The local equity market was sharply lower in June, with the SWIX falling by 3.8% for the month. Over the last 12 months, the South African equity market has
returned a mere 0.3%. South African equities have now failed to provide a positive real return over one-, two- and three-year time periods. Global equity markets,
on the other hand, have been strong in US dollar terms. The MSCI All Countries Index returned 18.8% in US dollars over the last 12 months, with emerging
markets continuing to outperform developed markets. However, rand strength has tempered these returns to 5.6% in rand terms.
Local bonds experienced a slight sell-off in June but have still returned 7.9% over the last 12 months. Similar to local equity, the local listed property sector has
also struggled, returning only 2.8% in the last 12 months. Local cash has returned 7.2% in the last year.
HELPLINE +27 21 524 4430 | FACSIMILE +27 21 441 1199 | EMAIL [email protected] | INTERNET www.ommultimanagers.co.za
Old Mutual Multi-Managers is a division of Old Mutual Life Assurance Company (South Africa) Limited. Registration number 1999/004643/06. Old Mutual Life Assurance Company (South Africa) Limited is a licensed
financial services provider, FSP 703, authorised in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 to furnish advice and render intermediary services with regard to long-term insurance and
pension fund benefits as well as providing intermediary services as a discretionary investment manager. The investment portfolios are market-linked and policy based. Investors’ rights and obligations are set out in the
relevant contracts. Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may
not get back the full amount invested. Past performance is not necessarily a guide to future investment performance. Guarantees on returns and against capital losses are not provided. All returns are rand returns unless
otherwise stated. Whilst every care has been taken in compiling the information in this document, the information is not advice and Old Mutual Multi-Managers and/or its associates do not give any warranty as to the
accuracy or completeness of the information provided and disclaim all liability for any loss or expense, however caused, arising from any use of or reliance upon the information.